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In March 2017, the Supreme Court overruled a much-publicised 2015 Court of Appeal decision, and determined the proper interpretation of s393 of the Financial Services and Markets Act 2000 (FSMA). It held that the Financial Conduct Authority (FCA) had not identified Mr Achilles Macris in notices served on his former employer, JP Morgan Chase Bank NA (JP Morgan), on 18 September 2013.

In 2012, JP Morgan reported trading losses within its Synthetic Credit Portfolio (SCP) of US$6.2 billion. The SCP was part of JP Morgan’s Chief Investment Office (CIO) in London and New York, and the head of SCP reported to Mr Macris. As well as considering the causes of the losses, an investigation by the FCA also found that JP Morgan had not been as open with the FCA as it should have been when the FCA first started enquiring about the matter.

The FCA served notices on JP Morgan in September 2013, in which it criticised the actions of “CIO London management” and stated that it had been misled by the actions of CIO London management. Mr Macris argued that references to CIO London management referred specifically to him and therefore under s393 of FSMA he, as a third party, should have been served with a copy of the notices to enable him to make representations to the FCA.

In the Upper Tribunal, Mr Macris produced two witnesses who stated they could identify him from the reference to CIO London management. He also relied on a report published by the US Senate Committee on SCP’s losses prior to the notices. The report, which was available on the internet, identified Mr Macris by name and quoted from emails also referred to in the FCA’s notices, leading Mr Macris to argue that anyone reading the report and the notices could deduce that references to CIO London management were references to him. Judge Herrington upheld Mr Macris’ complaint and held that he was entitled to be treated as third party for the purpose of s393.

The Court of Appeal, while departing from the reasoning of Judge Herrington, reached the same conclusion. Lady Justice Gloster formulated a two-stage test of whether an individual is identified for the purpose of s393. First, the allegedly prejudicial statements in the notice, when read alone, must refer to a person (other than the one to whom the notice is addressed). Second, and based on the law of defamation, the relevant words must be such as would reasonably lead a person acquainted with the individual, or who operates in his or her sector of the financial services industry, to believe that he or she is the person identified. In considering this second stage, recourse to material not contained in the notice was held to be permissible. Applying this test, it was held that Mr Macris was identified by the notice.

Before the Supreme Court, the FCA argued that a person is identified in a notice only if the terms of the notice would reasonably lead the ordinary reader to conclude that the notice unambiguously identifies the individual. Lord Sumption adopted an even narrower test. He concluded that a person is identified in a notice under s393 only if he or she is identified by name or a synonym, such as a job title or office such as “chief executive”. If the identification is by synonym, it must be apparent from the notice alone that the synonym could only apply to one person and that the person could be identified by the contents of the notice or from publicly available information. Such publicly available information can be used only to interpret, not to supplement, the contents of the notice. Lord Sumption also stated that the relevant audience for a s393 notice is the public at large. Applying this test, Lord Sumption allowed the appeal, finding that reference to CIO London management was insufficient for the ordinary person to conclude that it was a synonym for Mr Macris.

The decision was not unanimous with Lord Wilson dissenting and stating that the decision of the Supreme Court did not strike a fair balance between the implications of identification for the FCA and an individual wrongly criticised in notices. His alternative formulation of the test was also a two-stage test: first, the notice alone must refer to an individual; and second, the words of the notice would cause a person in the same sector of the market, not personally acquainted with the individual, and by reference only to information in the public domain, to conclude the individual is the person referred to in the notice. Although Lord Mance agreed with Lord Wilson’s legal analysis, he reached the same conclusion as the majority.

The judgment is a significant one for the FCA, which had faced a number of similar references of FCA notices to the Upper Tribunal following the Court of Appeal’s decision. The practical effect of the decision is that, applying the extremely narrow interpretation of s393, it is unlikely the FCA will ever be found to identify an individual in a notice unless it expressly intends to do so.